GBP/USD nosedives to the lowest level since March 2017, below mid-1.2200s

• The incoming Brexit-related headlines weighed heavily on the British Pound.
• The USD bullish run remained uninterrupted and added to the bearish bias.
• Extremely oversold conditions might trigger some short-covering bounce.

Selling pressure around the British Pound picked up the pace in the last hour, with the GBP/USD pair crashing farther below the 1.2300 handle for the first time since March 2017.

The latest leg of a sudden drop of over 50-pips followed the new UK PM Boris Johnson’s comments, reiterating his stance to leave the EU on October 31 and that if our partners are not ready to move on the backstop then we have to get ready for a no-deal Brexit.

This comes on the back of earlier remarks by Irish minister Donovan, saying that the EU cannot change its position on the backstop, which continued fueling speculations that the UK will crash out of the EU without a deal and exerted some heavy pressure on the British Pound.  

The pair tumbled to levels below mid-1.2200s, or fresh 29-month lows, and was further pressurised by the prevalent bullish sentiment surrounding the US Dollar, which remained support by Friday’s stronger-than-expected US GDP growth figures for the second quarter of 2019.

However, extremely oversold conditions on hourly charts helped find some support at lower levels amid absent relevant market moving UK/US economic releases, though any meaningful recovery attempted might still be seen as a selling opportunity.

Technical levels to watch